Microsoft's new commerce experience (NCE) for CSP - what you need to know

Microsoft has been working to consolidate the multiple channels by which a customer can purchase Microsoft services and, in doing so, simplify the customer’s buying journey and licensing complexity.

To achieve this, Microsoft launched a new commercial model called the New Commerce Experience (NCE) for Microsoft Azure in 2019. In January 2022 they expanded NCE to include Microsoft 365, Dynamics 365, and Power Platform across their seat-based subscription services with the current agreement being phased over the next six months.

As your trusted Microsoft Partner, Claranet is here to help you to understand the impact that NCE will have on how you procure Microsoft 365 subscriptions and licenses. So, let’s start by lifting the lid on NCE.

What is the NCE?

The New Commerce Experience (NCE) is the ‘per seat’ model for Microsoft 365, Dynamics 365, and Power Platform subscriptions, and is the latest in the evolution of Microsoft’s Cloud Service Provider (CSP) program.

To support customers who have more fluid requirements around Microsoft 365 (for instance, businesses with seasonal workers where they might need a number of Microsoft 365 licenses for a brief period of time) then Microsoft are releasing a one-month subscription SKU. This subscription will carry a one-month term and therefore aligns neatly with businesses that have ad hoc, occasional subscription needs.

For a more predictable user base, where there is more certainty around a particular subscription type and quantity of licenses, customers can commit to a subscription and quantity of licenses for either a 12-month or 36-month term. In return for this commitment, the customer will benefit from a unit price reduction over the alternative one-month subscription SKUs.

What’s more, customers can mix and match the different subscription options. For example, if a business employs 50 full-time staff members they can commit to 50 x Microsoft 365 E3 licenses for a 12-month term and get the best commercial terms for this commitment. If the same business then employs an additional 10 seasonal users for one month, then they can license these users with the one-month subscription SKU, knowing they can remove those subscriptions after the one-month term when they are no longer needed, and with no on-going financial commitment.

Key Dates

• 01 JAN 2022: NCE for Modern Workplace and Dynamics will reach general availability so any new subscription can be bought under the current Commerce model or the NCE.
• 01 MAR 2022: New subscription will be provisioned as NCE only. During March Microsoft will also be increasing the price across most Microsoft 365 SKUs by between 15-20%.
• 01 JUL 2022: All subscriptions for Modern Workplace and Dynamics will be required to be procured through the NCE Platform and any subscription that has a renewal date after this date will be renewed under NCE.
• Your contract date and subscription renewal date might differ. For confirmation of your subscription renewal date please contact Claranet.

What Does This Mean for You?

The introduction of NCE will change how CSP customers purchase their M365 subscriptions. It will be even more important for customers to get their subscription type and license quantity right from the start of the agreement, and this is where Claranet can help.

We will provide an initial consultancy to map your user and business needs to the right Microsoft 365 subscription SKU. We can also advise on the best subscription model (one month, 12-month, 36-month) based around the dynamics of your workforce and your mix of temporary and full-time users.

Key Takeaways:

• A new subscription model – called NCE - is coming to CSP customers in January 2022.
• NCE will require customers to commit to a particular Microsoft 365 subscription type, and a set license count for the term of the subscription.
• Subscriptions will be available in one month, 12-month, and 36-month terms.
• Customers can increase their license count during the term of their subscription, but they can’t reduce the license count*.
• If customers require the flexibility to decrease their license count, then the one-month subscription SKU is a better option.
• Discount pricing apply to annual and multi-year subscriptions.

* A subscription change (cancellation and/or reduction in the number of licenses) can be made ONLY within the first 72 hours of the initial change being made. For instance, if you provision an additional 100 x E3 licenses, but you realise that you only needed to provision an extra 10 licenses, then you can correct this error providing this change is made within 72 hours.

The Claranet approach

With the amount of change and the introduction of the new NCE agreement, now is the perfect time to review your Microsoft 365 estate and requirements to make sure you are making the most of your current subscriptions and services. To find out more about Microsoft optimisation, speak to a workplace expert. 

FAQ:

What are the terms for the new Microsoft 365 Subscriptions?

• The terms are set at one month, 12 months, or 36 months. A one-month term carries a price premium of 20%. We will align a Claranet contract with each of a customer’s Microsoft 365 subscription. If a customer has three different Microsoft 365 subscriptions, then they will have three contracts.

Can a customer cancel their subscription mid-term?

• Yes, but the customer will be liable for any outstanding charges associated with that term

Can a customer change their subscription mid-term?

• If there is an upgrade path between the customers current subscription and the one they would like to move too then they can change. However, if there is not an upgrade path then the customer cannot change their subscription.

Can a customer change the number of licenses associated with a subscription mid-term?

• Yes, a customer can increase their associated licenses and their monthly charge will increase pro rata to accommodate the new count. However, customers cannot decrease their license count during the term of the subscription. Customers can schedule a decrease within 72 hours of the subscription renewal date so that the subscription renews against a lower base number of licenses.

What happens when a subscription term ends?

The subscription will automatically renew for another term, and at the license count in place at the time of the renewal, unless:

• The customer provides at least 90 days-notice prior to the auto-renewal requesting not to renew. This will then terminate any ongoing service around that subscription between the customer, Claranet and Microsoft.
• The customer schedules a license count change so that the auto renewal takes effect against a different number of licenses. The customer will need to notify us of the required license count in advance of the renewal so we can make the appropriate changes at the time of renewal.

If a subscription is created in error, or the wrong number of licenses have been associated, can this be corrected?

• Yes. Customers have a 72-hour window within which they can make changes. For instance, if a customer’s provisions 100 x E3 licenses on Friday at 1700hrs (GMT), but then realised they actually needed only 10 x E3 licenses, then they have until 1659hrs (GMT) on the following Monday to make any changes.

If a subscription is cancelled in error, can it be re-activated?

• No. You cannot reactivate a cancelled subscription. A new subscription with a new term would be required.

What happens to the customer’s data once a subscription has been cancelled?

• The data will be purged by Microsoft as per their data retention and deletion policies. Typically, data is deleted 90 days after the subscription/license has been cancelled with Microsoft. We can provide guidance and alternative data protection products which will allow customers to preserve any data relating to cancelled licenses/subscriptions.

My existing subscription expires before 1st July 2022. What will happen?

• If your existing subscription expires before the 1st of July 2022, then you can either renew that subscription for another 12-month term or purchase an NCE subscription.

My existing subscription expires after the 1st July 2022. What will happen?

• If your existing subscription expires after the 1st July 2022, then your renewal will be based on the NCE subscriptions, and the rules of NCE will apply.